The global vehicle telematics market is estimated to garner a revenue of ~ USD 215,000 Million by the end of 2033 by growing at a CAGR of ~18% over the forecast period, i.e., 2023 – 2033. Further, the market generated a revenue of ~ USD 75,000 Million in the year 2022. The market is primarily driven by higher count of connected cars along with expansion of automotive sector and high demand of vehicles by the population.  In 2021, there were nearly 237 million connected cars worldwide, and the count is expected to reach approximately 400 million by 2025.

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The increasing requirement of semiconductor chips owing to its prolonged shortage due to lockdown imposed by pandemic, it is to accelerate its growth of semiconductor companies. In 2021, more than 1 trillion semiconductors were sold in 2021. In addition, telematics helps drivers to reduce consumption of fuel by tracking their unused time and increasing their efficiency. Alarming need to reduce fuel usage and rising requirement for safety assistance in the automobile is to boost the growth of vehicle telematics market.

Global Vehicle Telematics Market: Growth Drivers and Challenges

Growth Drivers

• Need to Minimize the Fuel Consumption - With the rising prices and shortage of fuel, the government is focusing on minimize its usage. Also, the high production of vehicles is expected to increase the demand of fuel which is generating an insufficiency for everyone, which in turn, is expected to bring lucrative growth opportunities. In 2020, the demand of fuel from transportation sector of both OECD and non-OECD regions was equal. Moreover, by 2040, the fuel demand in non-OECD region is likely to increase twice, from about 47 quadrillion btu (British thermal units) in 2012 to 94 quadrillion btu.

• Rising Popularity of Movement and Location Tracking Feature - Location tracking is useful to protect the vehicle from dangers and facilitates to contact for assistance in emergency circumstances. Currently, nearly 98% of cars is likely to have location tracking technology in next few years and there are around 78 million cars on road, embedded with tracking technology.

• Increase in Demand for Semiconductor Chips and its Production - There had been the shortage of semiconductor chips in past few years, which has increased its demand across the market. The global sale of semiconductor reached almost half a trillion dollars in 2021.

• Soaring Need for Automobiles with Advanced Safety Features - Owing to rising cases of accidents, the need of advanced safety feature is growing and turned out to be of significant importance. In the United States, around 45% wish to have blind spot warning system and about 51% expect to have backup warning from the vehicle.

• Increasing Number of Automobiles with Connectivity Solution - Nowadays, with the rising prevalence in IoT and 5g adoption, people expect their car to perform all the functions similar to their computers and mobile phone which is making connectivity solution the need of an hour. By 2030, more than 2 billion connected cars are expected to exist worldwide.

 Challenges

• Risk of Data Theft Associated with Telematics’ Data - The telematics system contains huge volume of sensitive data which is vulnerable to risk. The complexity of the telematics system leaves a space for an error in cybersecurity. The breach of network might happen during the transfer between the telematics sensors. Thus, security concerns involved in vehicle telematics system is expected to hinder the market growth.
• Exorbitant Cost of Installation for Getting Connectivity Feature
• Difficult in Interoperability in Devices Produced by Different Manufacturers

The global vehicle telematics market is segmented and analyzed for demand and supply by vehicle type into passenger car and commercial vehicle. The passenger car segment is expected to hold the largest market size by the end of 2033. The growth is expected on the account of rising need of passenger car which is prompting the sales of passenger cars. The burgeoning population is demanding passenger cars for fulfilling their needs which is projected in increase the production rate of passenger cars. In 2020, globally, around 65 million passenger cars were sold. Furthermore, boosted sales of electric passenger car is to propel the growth of the segment. Globally, there were around 16 million electric cars on road in 2021. In the first quarter of 2022, nearly 2 million electric passenger cars were sold.